Answer to Question #47878 in Microeconomics for ebin antony

2014-10-14T22:25:30-0400

Question #47878

what is called central problems of an economy and how it is solve?

Expert's answer

2014-10-21T12:37:24-0400

The problem of scarcity of resources which arises before an individual consumer also arises collectively before an economy. On account of this problem and economy has to choose between the following:(i) Which goods should be produced and in how much quantity?(ii) What technique should be adopted for production?(iii) For whom goods should be produced?These three problems are known as the central problems or the basic problems of an economy. This is so because all other economic problems cluster around these problems. These problems arise in all economics whether it is a socialist economy like that of North Korea or a capitalist economy like that of America or a mixed economy like that of India. Similarly, they arise in developed and under-deve&not;loped economics alike.